|
In July 2005 the Quoted Companies
Alliance (QCA) published Corporate Governance
Guidelines for AIM Companies. In July 2006 the
Company's board agreed to adopt these guidelines
with which it has been in full compliance throughout
the year.
The board remains accountable to the Company's
shareholders for good corporate governance and
continues to strive for the highest standards.
A summary of matters requiring action/approval
by the board is compliant with Appendix A of the
QCA published Corporate Governance Guidelines
for AIM Companies
The Company supports the concept of an effective
board leading and controlling the Company. The
board is responsible for approving Company policy
and strategy. It meets at least every three months
and is supplied with appropriate and timely information.
The directors are free to seek any further information
they consider necessary. All directors have access
to advice from the company secretary and independent
professionals at the Company's expense. Training
is available for new directors and other directors
as necessary. A number of the Group's key strategic
and operational decisions are reserved exclusively
for the decision of the board.
The board consists of two executive directors
who hold the key operational positions in the
Company and six non-executive directors, who bring
a breadth of experience and knowledge, all of
whom are independent of management and any business
or other relationship which could interfere with
the exercise of their independent judgement. The
board's make up provides a balance whereby the
board's decision making cannot be dominated by
an individual or small group. The Chairman of
the board is N G McNair Scott and the Company's
business has been managed since July 2006 by J
G Henry, the Chief Executive Officer. The board
has named Sir Richard Brooke Bt. as the senior
independent non-executive director.
It is noted that the QCA takes the view that independence
of action is likely to be lost the longer a director
serves on the board. The period of nine years
has been put forward by the QCA as the time by
which independence may be deemed to be compromised.
The directors of the Company take the view that
the breadth of experience of the six non-executive
directors, their knowledge of the Company after
a significant period of service, and their detachment
from the day to day issues within the Company
provide a sufficiently strong and experienced
balance with the executive members of the board.
This breadth of experience, allied to the management
information provided by the Company, enables the
non-executive board members to assess and advise
the executives on the major risks faced by the
Company. In view of this the board continues to
believe that shareholders should regard all the
Company's non-executive directors as independent.
In keeping with the provisions of the QCA the
directors of the Company acknowledge that a number
of the non-executive directors have served for
a period that exceeds nine years. Therefore N
G McNair Scott, Sir Richard Brooke Bt., J F Newman
and R A Pilkington continue to offer themselves
for re-election to the board on an annual basis.
The board conducted a formal process to evaluate
its effectiveness and that of the board committees
and individual directors. Each director's performance
was appraised by the Chairman reflecting input
from the other directors: the senior non-executive
director appraised the Chairman's performance
on the same basis. This evaluation process takes
place annually and aims to cover board dynamics,
board capability, board process, board structure,
corporate governance, strategic clarity and alignment
and the performance of individual directors.
In addition to ad hoc meetings arranged to discuss
particular transactions and events and the AGM,
the full board met on seven occasions during the
year. The Audit committee met on three occasions,
the Remuneration committee on three occasions
and the Nomination committee on three occasions.
The Nomination committee meets at least once
per year to select and recommend to the board
suitable candidates for both executive and non-executive
appointments to the board. The committee reviewed
the annual performance appraisals of all the board
members during the year. The membership of the
committee comprises N G McNair Scott (Chairman),
Sir Richard Brooke Bt., J F Newman and R A Pilkington.
The Remuneration committee reviews the performance
of the executive directors and sets the scale
and structure of their remuneration on the basis
of their service agreements with due regard to
the interests of the shareholders and the performance
of the Group. The Remuneration committee also
makes recommendations to the board concerning
employee incentives, including the allocation
of share issues to employees. Directors of the
Group are not permitted to participate in discussions
or decisions of the committee concerning their
own remuneration. The membership of the committee
comprises N G McNair Scott (Chairman), Sir Richard
Brooke Bt., J F Newman and R A Pilkington.
The committee is chaired by Sir Richard Brooke
Bt. and consists of N G McNair Scott, R S Robertson, J
F Newman and R A Pilkington.
The Audit committee meets at least twice a year
and provides a forum for reporting by the Company's
external auditors. Meetings are also attended,
by invitation, by other members of senior management
as appropriate. The Audit committee is responsible
for reviewing a wide range of financial matters
including the status of the Company as a going
concern and the half-year and annual financial
statements prior to their submission to the board.
The Audit committee keeps under review whether
an internal audit function would add value to
the Company, and also the extent of non-audit
services supplied by the external auditors to
the Company.
No director has any service contracts, consultancy
agreements or other such arrangements with a notice
period in excess of one year.
After making enquiries and considering the matters
referred to in the financial review and the basis
of the financial statements' preparation, the
directors have a reasonable expectation that the
Group has adequate resources to continue in operational
existence for the foreseeable future. For this
reason they continue to adopt the going concern
basis in preparing the financial statements.
A resolution to re-appoint Grant Thornton UK
LLP as auditors will be proposed at the AGM.
The board is satisfied that the provision of
non-audit services, including the role of Nominated
Adviser by Grant Thornton UK LLP is compatible
with the general standard of independence for
auditors and does not give rise to any conflict
of interest. The board keeps its non-audit advisers
under continual review.
The board is responsible for maintaining a sound
system of internal control to safeguard shareholders'
investment and the Company's assets. Such a system
is designed to manage, but not eliminate, the
risk of failure to achieve business objectives.
There are inherent limitations in any control
system and, accordingly, even the most effective
system can provide only reasonable, and not absolute,
assurance against material misstatement or loss.
In accordance with the guidance of the Turnbull
Committee on Internal Control, an ongoing process
has been established for identifying, evaluating
and managing risks faced by the Company. This
process has been in place throughout the year
and to the date of approval of these financial
statements and includes the following:
- key risks and the impact of these to the Group's
business are reviewed and considered by the
directors;
- the board reviews these key risks as part
of the budget approval process;
- executive directors visit each operation regularly,
when these key risks are reviewed and actions
taken as necessary;
- control procedures have been communicated
to operations' management who review local procedures
for Group compliance;
- the head office finance function will visit
each operation at least twice a year to review
local financial controls and compliance with
Group procedures and report to the board;
- the Group has a comprehensive system for financial
reporting. The board approves the annual budget
and five year forecast. Monthly results are
reported against budgets and variances analysed.
Great importance is placed on the monitoring
and control of cash flows, and cash forecasts
are reported to the board on a weekly basis;
- as part of the year end external audit, management
have requested the local auditors of each operation,
including the head office in London, to prepare
a management letter on their findings on the
internal financial controls. This is reported
to and reviewed by the Audit committee;
- the external auditors periodically carry out
a review of the head office's internal financial
controls and report to management and the Audit
committee;
- the board has to approve all long-term currency,
commodity and interest rate hedging, along with
all capital investment projects and debt facilities;
and
- the Chairman and the executive directors meet
on a regular basis to discuss the management
of the Group and review any business action
risks. Minutes of these meetings are circulated
to all members of the board.
The principal risks facing the Group are those
relating to the volatility of the gold market,
reliance on the expertise of the key Group personnel,
as well as risks connected with uncertainties
of the Indonesian, Malaysian and Chinese political,
fiscal and legal systems, including taxation and
currency fluctuations.
Regular meetings are held with employee representatives
to discuss strategies and the financial position
of the Group and their own business units. The
Group is committed to provide equal opportunity
for individuals in all aspects of employment.
The Company values the views of its shareholders
and recognises their interest in the Company's
strategy and performance, board membership and
quality of management. It therefore holds regular
meetings with, and presentations to, its institutional
and private shareholders to discuss its objectives.
The Company also regularly meets, with the help
of its brokers, institutions that do not currently
hold shares in the Company, to inform them of
its objectives.
The AGM is used to communicate with institutional
and private investors and they are encouraged
to participate. The Chairmen of the Audit, Remuneration
and Nomination committees are available to answer
questions. Separate resolutions are proposed on
each issue so that they can be given proper consideration
and there is a resolution to approve the Annual
Report and Accounts, and to approve the report
on directors' remuneration. The Company counts
all proxy votes and will indicate the level of
proxies lodged on each resolution, after it has
been dealt with by a show of hands.
The Company has engaged the services of Buchanan
Communications to help in its financial public
relations strategy.
|
.gif)